Nasdaq rebounds from sell-off

Index rises 2.7 percent after Monday's 6% drop

Dow closes up 8.02 points

Wall Street

April 21, 1999|By BLOOMBERG NEWS

NEW YORK -- The Nasdaq composite index, the U.S. market's biggest basket of Internet and computer shares, staged its biggest rally this month on optimism that the past week's 10 percent drop was too steep given the industry's growth outlook.

Microsoft Corp., which reported better-than-expected earnings after the market closed, led the Nasdaq higher after losing 6 percent Monday. Internet shares such as Inktomi Corp. soared.

The Nasdaq rose 64.03, or 2.7 percent, to 2,409.64, its best showing since March 29. The Dow Jones industrial average eked out an 8.02-point gain to 10,448.55, and the Standard & Poor's 500 index rose 16.69, or 1.3 percent, to 1306.17. Drug stocks led gainers after Johnson & Johnson reported better-than-expected profit.

Cyclical stocks Chevron Corp. and Alcoa Inc., held back the Dow average yesterday. Chevron fell $4.875 to $97.0625, after gaining 7.8 percent in a week. Because it had risen so quickly, its stock was cut to "market perform" from "top pick" by analyst John D. Hervey at Donaldson Lufkin & Jenrette Securities Corp.

Alcoa, up 22 percent in the previous five sessions, dropped $1.8125 to $52.875.

Wal-Mart, another Dow stock, finished up $2.875 to $47.75.

Elsewhere on the broad market, the Russell 2,000 index, a benchmark of small-cap stocks, rose 2.93 to 415.34; the Wilshire 5,000 index jumped 140.87 to 11,932.09; the American Stock Exchange composite index advanced 1.87 to 736.98; and the S&P 400 midcap index added 2.79 to 379.91.

The Sun-Bloomberg index of the top 100 Maryland stocks gained 0.40 to 177.85.

Declining issues had a 6-to-5 lead over advancers on the New York Stock Exchange, where volume was heavy at 985.4 million shares, making it the 10th-busiest day ever.

Inktomi gained $26 to $115 after analysts Rakesh Sood and Michael K. Parekh at Goldman, Sachs & Co. put it on the firm's "recommend list." Sood said Inktomi will gain customers when it begins operating an online shopping mall in June.

CMGI Inc., which invests in Internet companies, rose $9.50 to $223.50, then slumped to $185, only to rebound to Monday's closing price of $214 -- all before 11: 30 a.m. The stock ended down $8 at $206.

Not all Internet shares gained. Network Associates Inc. fell $4.1875 to $11.0625 after the No. 1 maker of security software said its first-quarter profit rose 14 percent, in line with diminished expectations, and warned that second-quarter sales will be lower.

Immunex Corp. rose $20.75 to $87 after the biotechnology company said first-quarter sales of its new Enbrel drug for rheumatoid arthritis were a greater-than-expected $59.7 million.

Immunex, which is majority-owned by drugmaker American Home Products Corp., had said it expected Enbrel sales to total about $40 million. American Home gained $2.5625 to $62.3125.